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Named and shamed: The ten worst funds over three years

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Investors have ploughed more than £34bn into underperforming funds which have severely lagged peers over the past three years, the latest RedZone report from Chelsea Financial Services reveals.

A total of 146 funds out of a universe of around 2,000 have produced third or fourth quartile performance over the last three consecutive years.

The majority of serial offenders are UK mandates, with a number of well-known managers slipping down to the lower echelons of the IMA UK All Companies sector over this period.

Standard Life Investments’ UK Equity Growth fund, run by Karen Robertson, and Thomas Ewing’s Fidelity UK Growth have both produced fourth quartile performance over the past three years, returning 17.83% and 19.56% respectively compared to the peer group average of 31%.

However, both funds fared better than the worst performing fund in the sector and in the entire fund universe – Manek Growth.

The fund was set up in the late 1990s by Jayesh Manek after he won a Sunday Times fantasy fund manager competition. It has produced a negative return of -22.23% over the past three years, underperforming the sector average by 52.89%.

Other UK funds joining Manek in the bottom ten include UBS UK Smaller Companies, Legal & General Growth, and Marlborough UK Income & Growth, which have underperformed their respective sectors by 37.97%, 26.67% and 23.33%.

A host of other asset classes feature in the rest of the top ten, including two emerging market offerings.

The IM HEXAM Global Emerging Markets fund, managed by Bryan Collings, has undershot the sector average by 35.67%.

Similarly, Mark Mobius’ Templeton Global Emerging Markets fund has produced poor performance over the past three years, some 28.05% below the sector average.

Just one bond fund made the bottom ten – City Financial Strategic Gilt – which has underperformed peers by 21.96%.

“The RedZone is not an exact science, based as it is, almost exclusively, on quantitative analysis. However, it is designed to bring to investors’ attention those funds which are consistently underperforming and therefore warrant at least a review, if held in their portfolio,” said the report.


Ten worst performing funds over the past three years

 Fund name % underperformance
from sector average
 Manek Growth  52.98
 UBS UK Smaller Companies  37.97
 IM HEXAM Global Emerging Markets  35.67
 Aviva Investments Property Investment  30.87
 Templeton Global Emerging Markets  28.05
 F&C High Income  27.79
 Legal & General Growth  26.67
 JP Morgan European Smaller Companies  23.67
 Marlborough UK Income & Growth  23.33
 City Financial Strategic Gilt  21.96

Over three years to 30/04/2013

Source: FE Analytics

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